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Economics 101
Brief Outline
Study Suggestions: Review the topics listed below for each assigned chapter. Check the
terms and concepts and the summary at the end of each chapter in the text. Be sure to
study the Key Graphs and read the “Last word” and “Consider this” applications in each
chapter. Use the lecture notes on my web site and try some of the practice quizzes and
power point presentations found on the textbook web page.
Unit I
August 16--September 16
Chapter 1 Limits, Alternatives, and Choices: Limited resources, choices and opportunity cost
(4) contrast the following: macro-economics vs. microeconomics (6-7) positive vs. normative
economics ((7) resource categories (10) production possibilities (11) law of increasing costs, Key
Graph (12) optimal output MB =MC, figure 1.3 (13) present choices and future possibilities,
figure 1.6, pitfalls of sound reasoning (16-18)
Chapter 1 Appendix: Direct and inverse relationships, dependent and independent variables,
“other things equal” or ceteris paribus assumption, slope of a line (23-24)
Chapter 2 The Market System and the Circular Flow: Contrast the command system vs. the
market system (30) characteristics of the market system (30-32) five fundamental questions (3437) the “invisible hand” (38) the circular flow model, Key Graph (40) resource markets, product
markets (40-42)
Chapter 3 Demand, Supply and Market Equilibrium: The law of demand, individual demand
and market demand, change in demand, (reaction to determinants of demand) (46-50) change in
quantity demanded (reaction to price change) (51) the law of supply, change in supply (reaction
to determinants of supply (51-54) change in quantity supplied (reaction to price change) (54)
market equilibrium, Key Graph (54-55) surplus, shortage (55-56) productive efficiency,
allocative efficiency (56-57) changes in supply, demand and equilibrium (57-58) price ceilings
and price floors (59-62)
Examination 1
Unit II
(September 15/16)
September 20--October 21
Chapter 4 The U.S. Economy: Private and Public Sectors: Functional income distribution,
personal income distribution (73-74) plant, firm, industry, vertical merger, horizontal merger,
conglomerate merger, sole proprietorship, partnership, corporation, stock, bond, principal-agent
problem (75-78) the role of government, the five economic functions of government, legal
framework, maintaining competition, redistributing income, reallocation, stabilization (78-82)
transfer payments, externality (79) public good, free rider problem (80) quasi-public good (81)
Chapter 6 Elasticity, Consumer and Producer Surplus: Price elasticity of demand, midpoint
formula (114) price elastic, price inelastic, unitary elasticity, perfectly elastic, perfectly inelastic
(115-116) total revenue test (116-119) determinants of price elasticity of demand (120-122) price
elasticity of supply, market period, short run , long run (122-124) cross elasticity and income
elasticity (124-126) consumer and producer surplus (126-128) efficiency losses (129)
Chapter 7 Consumer Behavior: Law of diminishing marginal utility, Key Graph (135-137)
utility maximizing rule, marginal utility per dollar, (138-140) income and substitution effects
(140-141) the diamond- water paradox (142) cash and noncash gifts (144)
Examination 2
Unit 3
(October 20/21)
October 25- -December 2
Chapter 8 Costs of Production: Explicit and implicit costs, normal profit as a cost, economic
profit (155-156) short run vs. long run (156), short run production relationships, total product,
marginal product, average product, law of diminishing returns (157-159) Key Graph (160) short
run production costs, total fixed costs, total variable costs, total cost (159-162) per unit or average
costs, marginal cost (162-165) Key Graph (164) Figure 8.6 (165) long run costs, economies and
diseconomies of scale (166-169) Key Graph (167) minimum efficient scale, natural monopoly
(170) sunk costs (172)
Chapter 10 Pure Monopoly Characteristics of monopoly (202) barriers to entry (202-204)
marginal revenue is less than price (205-206) single price monopolist is a price maker and sets
price in the elastic price range (206-207) MC =MR rule, Key Graph (207-208) total, not unit
profit (209) economic effects of monopoly, price, output and efficiency, income transfer (210211) X-inefficiency, rent seeking (212-213) price discrimination, necessary conditions (214-215)
regulated monopoly, dilemma of regulation (216-219)
Chapter 11 Monopolistic Competition and Oligopoly: Characteristics of monopolistic
competition (223-224) concentration ratio, Herfindahl index (224-225)price and output in
monopolistic competition, Key Graph (225-226) monopolistic competition and efficiency,
(227-228) benefits of variety (229) characteristics of oligopoly (229-230) game theory, mutual
interdependence, collusive tendencies, incentive to cheat (232-233) kinked demand model, (234)
Key Graph (235) cartel and other collusion, joint monopoly profits (236-238) price leadership
(239) positive and negative effects of advertising (240-241) oligopoly and efficiency (241)
Chapter 9 Pure Competition Four market models (177) characteristics of pure competition
(177-178) perfectly elastic demand (178) profit maximization in the short run, MC = MR
approach (181-185) Key Graphs (184) shutdown case (185) marginal cost and short run supply
(186) Key Graph (187) profit maximization in the long run (189-193) pure competition and
efficiency, (193-197) Key Graph (194) productive efficiency: P=minimum ATC, allocative
efficiency: P = MC (195)
Chapter 12 The Demand for Resources: Significance of resource pricing (254) marginal
productivity theory, derived demand, marginal revenue product (MRP), rule for employing
resources, MRP=MRC, market demand for resources, determinants of resource demand (254259) elasticity of resource demand (261-262) optimal combination of resources, the least cost
rule(263-265
Examination 3: (December 1/2)
Class Evaluation: (December 6/7)
Final Examination (As Scheduled)